A Penetration Pricing Policy Is MOST LIKELY to Be Effective

question 106

Multiple Choice

A penetration pricing policy is MOST LIKELY to be effective when

• A)lowering the price has only a minor effect on increasing the sales volume and reducing the unit cost.
• B)many segments of the market are price sensitive.
• C)the high initial price will not attract competitors.
• D)customers interpret the high price as signifying high quality.
• E)enough prospective customers are willing to buy immediately at the high initial price to make these sales profitable.

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Definitions:

Restrain Trade

Practices or agreements that restrict free competition in business and commerce.

Price Discrimination

The practice of selling the same product or service at different prices to different customers, not based on cost differences.

Interstate Commerce

The exchange of goods, services, or money between parties in different states, governed by federal law in the United States.

Create A Monopoly

The practice or situation where a single company or entity exclusively controls a particular market, limiting competition and possibly leading to higher prices and less innovation.